Which of the Following Tools of Monetary Policy Is Used

question 274

Multiple Choice

Which of the following tools of monetary policy is used least often?

• A)open market operations
• B)setting the required reserve ratio
• C)setting the discount rate
• D)acting as a lender of last resort

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Definitions:

CAPM

The Capital Asset Pricing Model, a model that describes the relationship between systematic risk and expected return for assets, particularly stocks.

Betas

A measure of the volatility, or systematic risk, of a security or portfolio compared to the market as a whole.

Future Volatility

The degree of variation of trading prices over time, typically measured by the standard deviation of returns, predicting the range of potential movements of an asset's price.

Rates of Return

The gains or losses of an investment over a specified period, expressed as a percentage of the investment's initial cost.